Homes in predominately black neighborhoods are often undervalued compared to those in other neighborhoods, even when the homes are similar. In Marion County, there is a more than $41,000 difference between the county’s median home value and that of homes in majority-black neighborhoods. The difference means people in these communities may face more challenges when it comes to building wealth. That can have a lasting impact on generations of black families.
As the nation celebrates Black History Month, it’s important to understand the effect past housing policies have had on the black community—and continue to have to this day. The Center for Research on Inclusion and Social Policy (CRISP) at the IU Public Policy Institute examined how biased housing policies and real estate practices impact the black community in Marion County.
- In Marion County, 48 percent of black residents live in majority-black neighborhoods.
- About 23 percent of neighborhoods in Marion County are predominately black.
- These neighborhoods have the highest concentration of black owner-occupied housing.
Since nearly half the county’s black population lives in majority-black neighborhoods, lower home values can have far-reaching implications now and in the future for the people who live in those areas.
Home values in predominantly black neighborhoods are lower than in other Marion County neighborhoods.
The median home value in Marion County is $129,200. Yet, in its majority-black neighborhoods, that value drops by more than $41,000 to a median value of $87,821. This gap grows to $52,000 when compared to homes in neighborhoods that are not predominately black.
More than 88 percent of the county’s majority-black neighborhoods have median home values lower than the county median. About 42 percent have median home values of less than $75,000.
A Brookings Institute report examined some potential factors that could devalue homes in black neighborhoods, including race, household income, crime, and neighborhood amenities.
Using these factors, CRISP researchers found there was a connection between race, property crime, and income within a neighborhood and a home’s value in Marion County. In other words, higher concentrations of black residents and higher crime rates were associated with lower home values, while higher incomes were associated with higher home values.
Research on housing disparities consistently shows that white residents are more likely to be homeowners than black residents. That trend holds true in Marion County.
The county’s white homeownership rate is higher than both its overall rate and its black homeownership rate. Even in majority-black neighborhoods, white residents are more likely to own homes (56 percent) than their black neighbors (37 percent).
A previous report from CRISP found that renters in Marion County face rising rental costs and stagnant incomes. This could make it harder for families to save enough money to buy a home. National research suggests that black buyers could only afford about half of the homes on the market while white buyers could afford 80 percent of them in 2017.
Since homeownership is one of the main ways families can build wealth, generations of black families have been at a disadvantage because of federal policies and institutional practices that have historically excluded them from homeownership.
Problematic practices and policies
We can trace many of these differences back to racist real estate practices and policies that targeted black residents, such as redlining, which kept potential black homebuyers from moving into white neighborhoods. More recent research shows government-sponsored mortgage programs have excluded minority homebuyers. Other studies found that predatory lending practices and fraud affected black homeowners more than others during the 2007–2008 housing crisis.
Indiana’s Home Loan Practices Act was created to protect homeowners against predatory lending practices. Indiana Code also prohibits racial discrimination in credit applications. Despite these efforts, there is evidence that biased institutional practices are still happening in Indiana and Marion County. In 2018, the Fair Housing Center of Central Indiana found that fully qualified black homebuyers in Marion County experienced housing discrimination 76 percent of the time. Those incidents included differential treatment about unit availability and move-in specials, as well as bias during appointments. That same report found that 75 percent of black loan applicants were discriminated against in 2017.
Because many of these trends stem from discriminatory practices and policies that created segregated neighborhoods, undoing those causes is equally complex. In the short term, CRISP researchers will speak with Indianapolis residents who have experienced these trends firsthand to provide more context to the ongoing situation.
In addition, other stakeholders and leaders must consider how they or their organizations can help make affordable housing more attainable for black residents, and whether they can help address the systemic lack of resources in predominately black neighborhoods. These two changes can help more black families begin to build up their own wealth through homeownership, and allow future generations a chance at a better tomorrow.
Read the full CRISP Issue Brief on black homeownership at this link.